FINANCIAL MANAGEMENT(LL)-TEXT
FINANCIAL MANAGEMENT(LL)-TEXT
16th Edition
ISBN: 9781337902618
Author: Brigham
Publisher: CENGAGE L
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Chapter 6, Problem 2P
Summary Introduction

To compute: The required rate of return of AA stock.

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AA Corporation’s stock has a beta of 0.8. The risk-free rate is 4%, and theexpected return on the market is 12%. What is the required rate of return onAA’s stock?
AmDa’s common stock has a beta of 1.4. The market risk premium is 5% and the risk-free rate is 2%. What is the required rate of return on this stock according to CAPM?
Assume that the risk-free rate is 3.5% andthe market risk premium is 4%. What is the required return for the overall stock market?What is the required rate of return on a stock with a beta of 0.8?

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